MBA 552

Organizational Behavior and Leadership

Introduction to the Field of

Organizational Behavior

Organizational behavior (OB)

The study of what people think, feel, and do in and around organizations.

Values

Stable, long-lasting beliefs about what is important in a variety of situations

What are Organizations?What are Organizations?

Groups of people who work interdependently toward some purpose

– Structured patterns of interaction

– Coordinated tasks

– Work toward some purpose© N. B. Scott

OrganizationalOrganizationalBehaviorBehaviorResearchResearch

UnderstandUnderstandorganizationalorganizational

eventsevents

PredictPredictorganizationalorganizational

eventsevents

InfluenceInfluenceorganizationalorganizational

eventsevents

Why Study Organizational Behavior

Organizational culture

The basic pattern of shared assumptions, values, and beliefs governing the way employees within an organization think about and act on problems and opportunities

Trends: Information Technology

• Affects how employees interact– Virtual teams– Telecommuting

• Affects how organizations are configured– Network structures -- alliance of several

organizations

Trends: Globalization

• Global companies:– Extend their activities to other parts of the world

– actively participate in other markets

– compete against firms in other countries

Trends: Globalization

• Implications of globalization:– New organizational structures

– Different forms of communication

– More competition, change, mergers, downsizing, stress

– Need more sensitivity to cultural differences

Network structure

An alliance of several organizations for the purpose of creating a product or serving a client

Virtual teams

Cross-functional groups that operate across space, time, and organizational boundaries with members who communicate mainly through information technologies

Contingent work

Any job in which the individual does not have an explicit or implicit contract for long-term employment, or one in which the minimum hours of work can vary in a nonsystematic way.

Trends: Employment Relationship

• Employability – employees perform many tasks, not a specific job

• Contingent work – no explicit or implicit contract for long-term employment

• Telecommuting – working from home, usually with a computer connection

to the office

• Virtual teams– operate across space, time, and organizational boundaries;

mainly communicate through electronic technologies

Trends: Changing Workforce

• Primary and secondary diversity

• More women in workforce and professions

• Different needs of Gen-X, Gen-Y, and baby-boomers

• Diversity has advantages, but firms need to adjust through:

– cultural awareness

– family-friendly

– empowerment

Primary Dimensions of Diversity

• Ethnicity

• Race

• Mental/Physical Qualities

• Age

• Gender

• Sexual Orientation

Secondary Dimensions of Diversity

• First Language• Life Experiences• Geographic Location• Behavioral Style• Education• Income

• Work Experience• Work Style• Parental Status• Marital Status• Occupation• Religion

More women in workforce and professions

Women represent 50% of the paid workforce.

Women represent 50% of professional accountants

Women represent 43% of medical school enrollment

Women represent 4% of the leadership of corporations

Different needs of Gen-X, Gen-Y, and baby-boomers

Baby-boomers born 1946-1964 desire job security and are workaholics

Gen-X born 1964-1977 less loyal seek and expect less security

Gen-Y born 1978 – 88? Expect plenty of responsibility and involvement in the employment relationship.

Different generations bring different values and expectations

Trends: Values and Ethics

• Values– Stable, long-lasting beliefs about what is important– personal, cultural, organizational, professional

• Importance of valuesa. Globalization -- more awareness of different valuesb. Values replacing command-and-controlc. More emphasis on ethical business conduct

• Ethics– Moral principles/values -- determines whether actions are

right/wrong and outcomes are good/bad

OrganizationalOrganizationalBehaviorBehaviorAnchorsAnchors

MultidisciplinaryMultidisciplinaryanchoranchor

SystematicSystematicresearchresearchanchoranchor

ContingencyContingencyanchoranchor

Open systemsOpen systemsanchoranchor

Multiple levelsMultiple levelsof analysisof analysis

anchoranchor

Organizational Behavior Anchors

Multidisciplinary Anchor

Psychology – Motivation, perception, attitudes, personality, job stress, leadership

Sociology- Team Dynamics, roles, socialization, communication patterns, organizational power

Anthropology- Corporate culture, organizational rituals, cross-cultural dynamics

Political Science- Inter-group conflict, coalition formation, power and politics, decision-making

Economics- Decision-making, negotiation, power

Multidisciplinary AnchorIndustrial engineering- job design, productivity, work measurement

Communications- Knowledge management, electronic mail, corporate culture, employee socialization

Information systems- Team dynamics, decision-making, knowledge management

Marketing- Knowledge management, creativity, decision-making

Women’s studies- Organizational power, perceptions

Systematic Research Anchor

Systematic collection of data about organizational principles and practices

Scientific method

A systematic, controlled, empirical, and critical investigation of hypothetical propositions about the presumed relationships among natural phenomena

Contingency AnchorIt depends ------ on the situation

Selection of the best strategy depends on the conditions under which a decision must be made.

Contingency approach

The idea that a particular action may have different consequences in different situations

Multiple Levels of Analysis Anchor

Individual Level - includes the characteristics and behaviors of employees including thought processes such as motivation, perception, personalities, attitudes, and values.

Multiple Levels of Analysis Anchor

Team Level – considers interaction of people, teams dynamics, decisions, power, organizational politics, conflict, and leadership.

Organizational Level- focuses on how people structure working relationships and how organizations interact with their environment

Open Systems Anchor

Organizations that take their sustenance from the environment and, in turn, affect that environment through their output

FeedbackFeedback FeedbackFeedback

OutputsOutputsInputsInputs

SubsystemSubsystemSubsystemSubsystem

SubsystemSubsystem SubsystemSubsystem

OrganizationOrganization

Open Systems Anchor of OB

Stakeholders

Shareholders, customers, suppliers, governments, and any other groups with a vested interest in the organization.

They influence the firm’s access to inputs and ability to discharge outputs.

Knowledge Management Defined

Any structured activity that improves an organization’s capacity to acquire, share, and use knowledge for its survival and success

Intellectual capital

The sum of an organization’s human capital, structural capital, and relationship capital

Intellectual Capital

• Human capital– Knowledge that employees possess

and generate

• Structural capital– Knowledge captured in systems and structures

• Relationship capital– Value derived from satisfied customers, reliable

suppliers, and others

Knowledge Management Processes• Knowledge acquisition

– Grafting– Learning– Experimentation

• Knowledge sharing– Communication– Communities of practice

• Knowledge use– Awareness– Freedom to apply knowledge

Grafting

The process of acquiring knowledge by hiring individuals or buying entire companies

Organizational Memory

• The storage and preservation of intellectual capital

• Retain intellectual capital by:– Keeping knowledgeable employees– Transferring knowledge to others– Transferring human capital to structural

capital

Fully describe intellectual capital, and explain how an organization can retain

this capital Intellectual capital is the sum of an organization's human capital, organizational capital, and relationship capital. Human capital refers to the knowledge that employees possess and generate. Structural capital is the knowledge captured and retained in an organization's systems and structures. Relationship capital is the value derived from satisfied customers, reliable suppliers, and other external sources that provide added value.

Intellectual capital retention continued

Retaining intellectual capital refers to retaining organizational memory. This includes keeping good employees and systematically transferring their human capital into structural capital when they must leave. It also includes documentation -- bringing out hidden knowledge, organizing it, and putting it in a form that can be available to others. It also includes embedding knowledge in the organization’s systems and structures.

Communities of practice:

Informal groups bound together by shared expertise and passion for a particular activity or interest.

Organization Culture

• Defining culture

• Does it matter?

• Describing culture

• Acquiring culture

• Changing culture

Defining Culture

• What is it? – “...the shared patterns of thought, belief, feelings, and values that

result from shared experience and common learning”– “system of shared meaning”– “The social glue that holds the organization together”

• Characteristics:– Holistic– Historically determined– Socially constructed (perceptions)– Soft– Difficult to change

Climate vs. Culture

• Climate = actual events

• Culture = individuals’ perception of events

Does It Matter?

• Enhances group members’ ability to adapt and survive

• Reduces uncertainty about what to do and how to do it (and thus, reduces anxiety)

• Provides sense of mission

• Strong or widely-held culture may lead to high performance (jury’s out on this one)

Single or Multiple Cultures ?

• Multiple cultures may be a sign of conflict– Mergers– Top-down attempts to “manage” culture

• Subcultures (core culture + adaptations)

• Countercultures

What is Included?

• Common language and conceptual categories

• Group boundaries and criteria for inclusion and exclusion

• Power and status

• Intimacy, friendship, and love

• Rewards and punishments: what is rewarded and punished, as well as what rewards and punishments are

• Ideology and “religion”: that is, how to manage the unmanageable and explain the unexplainable

Recognizing Culture

• Events:– Rites

– Ceremonials

– Rituals

• Communications– Myths

– Sagas

– Legends

– Stories

– Folktales

• Things– Symbols

– Language

– Gestures

– Physical setting

– Artifacts

Really minor distinctions among these

Layers of Culture

Symbols

Rituals

Heroes

Values Practices

Cultural Dimensions (Hofstede)

• Process vs. results

• Employee vs. job

• Parochial vs. professional

• Open vs. closed

• Loose vs. tight

• Normative vs. pragmatic

Cultural Dimensions (another perspective)

• Innovation and risk-taking

• Attention to detail

• Outcome orientation

• People orientation

• Team orientation

• Aggressiveness

• Stability

Yet Another Perspective….

I. Managing change

II. Achieving goals (how effective)

III. Coordinated teamwork

IV. Customer orientation

V. Cultural strength

Sources of Culture

• Founders

• Historical events

• Industry

• National culture

Acquiring Culture

• Selection process

• Socialization of new members

• Rites and ceremonies– Rite of passage– Rite of renewal– Rite of integration

Changing Culture

• Can it be changed?– In a new organization: The founder effect– Maybe yes?– Maybe no?

• Should it be changed?– Strong culture can be a barrier to innovation,

growth and change

OB in the Cross-Cultural Context

• Why are cross-cultural issues important?• Growing impact of global business

– New markets– Demand for global services– Low cost manufacturing

• U.S. management practices not necessarily likely to translate to different cultures

• Paradox: may be easier to adjust to a very different culture than to a very similar culture

Why International Management?

• Important to have a global perspective– Overseas suppliers or markets– Low cost production– Emerging markets (Eastern Europe, LDC)– E-business has no borders– Immigrant labor force even in U.S.

• Culture critical to global business, yet hardest to understand– Based on unspoken values and assumptions– Human behavior isn’t logical– But, human behavior is very complex

Approaches to International Business

EthnocentricHome countrymethods are thebest

PolycentricHost countrymethods are thebest

GeocentricUse the bestmethods, no matterwhat the source

Basic Principles of Culture

• What is logical and important in one culture may seem irrational and unimportant in another

• In describing cultures, people tend to stress the differences and overlook the similarities

• Stereotyping may be inevitable for people who lack frequent contact with another culture

• Cultures are not homogenous; differences exist due to gender, age, socioeconomic status, education

• Understanding another culture is a journey, not a goal

Barriers to Cross-Cultural Understanding

• Cultural chauvinism / corporate imperialism / ethnocentrism

• Stereotypes (positive and negative)

• The highly successful organization may find it more difficult to adapt

Cultural Values

• The ethical dilemma• Are there common values?

– Basic idea of social organization, goal orientation

– Personality structure (Big 5)

• What about cultural convergence?– Cultural evolution

– Cultural diffusion

– Immigration and acculturation

What Kinds of Differences Make a Difference?

• Some specific items:– Language– Religion

• Business practices and etiquette– Different laws– Different customs

• Culture in general

Language Issues

• U.S. one of few countries where we don’t learn a second (or a third) language

• Languages learned in school often do not translate to business usage

• Do you try?– Not in France, not unless you can pronounce it right !– Other countries, yes: it’s a gesture of goodwill

• But, even if the language is the same, will we understand? (Britspeak)

Languages of The World

0100200300400500600700800900

1,000

Mill

ions o

f S

peakers

Source:http://www.infoplease.com/

World Religions

Christianity Islam Hindu

Chinese Folk Buddhist Judaism

Other

Source:http://www.infoplease.com/

Catholic Protestant

Orthodox Other

Religious Issues

• Islam:– Ramadan fasting– 5 daily prayers (15 minutes or so), even at work– Modest dress for women (including head scarf)– Friday, not Sunday (noon prayers on Fridays)

Legal Issues

• Sample of Mexican employment laws– Individual employment contracts required– Strict limits on overtime– Unionization by facility– Full pay for workers while on strike– Discrimination covers political doctrine and

social condition

Different Country, Different Customs: Dress and Address

• Dress– “Casual Days” are a U.S. custom– Removing one’s shoes

• Addressing Other People– Herr und Frau, not first names in Germany– Titles (Dr., Professor, “Assistant Vice President”, etc.) very

important everywhere but U.S.

• Business cards essential in Latin America, Europe, Japan

• Personal space: much smaller in Latin America, Spain, Italy

Different Country, Different Customs: Time

• Time– Time fluid in Latin America, Spain, Italy

– Time off work: Germany, France, Scandinavia: 6 weeks vacation, August in the country

– Africa: everyone attends funerals (impact of AIDS)

• Working hours and pace– Europe (esp. Germany) isn’t open 24/7

– Latin America, Middle East, Japan: take time to establish relationship before getting down to business

Different Country, Different Customs: Eating and Drinking

• Drinking– Tea in Japan– Coffee in Egypt– Vodka in Russia– A pint over lunch in the UK

• Dietary Restrictions:– India: no beef– Islamic countries: no pork or alcohol

Perceptions of Corruption

0

2

4

6

8

10

12

Source: Transparency International

Higher score = less corrupt

Economic Freedom

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

Singa

pore

Irela

nd USChi

le UK

Finlan

d

Canad

a

Ger

man

yIta

ly

Japa

n

Mex

ico

Ugand

a

Niger

ia

Russia

Nigeria 3.6

Source: Wall Street Journal

Higher score = less freedom

Cultural Dimensions:Hofstede’s Big 4

• Based on survey of IBM employees worldwide• The dimensions

– Collectivism - Individualism

– Power Distance

– Uncertainty Avoidance

– Masculinity / Femininity (quality of life)

• Weaknesses:– Data 20 years old

However, recent research confirms this structure

Change in Cultures

• Hofstede’s data indicates some shift to individualism, but no change in other dimensions

• Disneyland phenomenon– That is, surface indicators change, but meaning does

not

• But….the case of Hong Kong– Management values in Hong Kong intermediate

between PRC and U.S.

– Indication of flexibility / change?

Collectivism - Individualism

• Identification with group vs. identification as an individual

• Collective cultures:– Think in terms of in-groups and out-groups

– Life decisions made by group

– Look after one’s in-group, no matter what

• Individualistic cultures– Concern for self and immediate family

– Individual privacy

• Association with level of economic development

Collectivism - Individualism: Where

• Venezuela• Pakistan• Taiwan• Portugal• Greece• Brazil• India• Japan• Arab countries

• Spain• Israel• Austria• Germany• Norway• France• Canada• Great Britain• U.S.

Collective…………...……Individualistic

Power Distance

• The extent to which a culture accepts that power is distributed unevenly

• High power distance– People have a place in society, high or low– Superiors are to be respected– Less trust and cooperation

• Low power distance– Equal rights for everyone– Hierarchies are established for convenience– Power can be judged to be legitimate or not

Power Distance: Where

• Philippines

• Mexico

• India

• Brazil

• Hong Kong

• France

• Turkey

• Pakistan

• Japan

• Argentina

• U.S

• Canada

• Australia

• Germany

• Sweden

• Ireland

• Denmark

• Israel

High…………………...……...……Low

Uncertainty Avoidance

• The extent to which a society feels threatened by ambiguity and uncertainty

• High uncertainty avoidance– Lots of policies, rules, regulations– Hard work valued, time is money– Acceptance of authority– Conflict avoided

• Low uncertainty avoidance– Look to common sense– Tolerance, constructive conflict– Aggression less accepted

Uncertainty Avoidance: Where

• Uruguay

• Belgium

• Japan

• France

• Mexico

• Israel

• Italy

• Austria

• Arab countries

• Germany

• Switzerland

• East Africa

• Canada

• U.S.

• India

• Great Britain

• Sweden

• Singapore

High…………………...……...……Low

Masculinity / Femininity (Quality of Life)

• The extent to which society values typically “masculine” values, such as assertiveness, and acquisition of things, as opposed to caring for others and quality of life.

• Masculine cultures– Clear gender roles; machismo– Live to work– Ambition, success valued

• Feminine cultures– Sympathy for the unfortunate– Work to live– People are important

Masculinity / Femininity: Where

• Japan

• Italy

• Mexico

• Ireland

• U.S.

• Australia

• Hong Kong

• Arab countries

• Brazil

• Israel

• Indonesia

• France

• Spain

• South Korea

• Portugal

• Finland

• Netherlands

• Sweden

High…………………...……...……Low

…Plus One

• Confucian Work Dynamic• Based on work done in East Asia by “Chinese

Cultural Connection” group• Focus on:

– Long-term– Order– Thrift– Persistence– Respect for tradition

Different Dimensions…Same Result

• Company provided housing, marriage brokers, etc. in Asian countries– Feminine concern for people?– Taking care of the in-group?

• Cooperative labor negotiations– Japan: collective orientation– Netherlands: feminine quality of life

• Economic growth and development– Europe: Protestant Work Ethic (Individualistic, High Power

Distance, Masculine)– Asia: Confucian Work Dynamic

Do National Borders = Cultural Borders?

• Multiple cultures– Canada– Belgium– India

• Culturally homogeneous areas– Scandinavia

• Cultural clusters

Cultural Clusters

Arabs

East-Central Europe

Developing Countries Latins

Anglos

Asians Northern Europe

General Expatriate Issues: The Sojourners

• How many are there?– Nobody really knows– Estimated 350,000 or more (estimate from 1996)

• Who are they?– 87% male– Managers– Sales, technical, professional

• What happens?– Estimated 25% to 50% of assignments fail– Cost…$50,000 and up

Why do Expatriates Fail?

• Family problems (60%)

• Inability to adjust– Lack of flexibility– “Culture shock”

• Lack of sensitivity to host culture

Culture Shock

• An emotional and psychological reaction to the confusion, ambiguity, value conflicts and hidden clashes that occur as a result of fundamentally different ways of perceiving the world and interacting socially between cultures. Disequilibrium

Aspects of Adjustment

• Sociocultural– Social skills needed to operate in different

culture

• Psychological– Well-being, satisfaction– “Culture shock”

What Can Be Done?

• Selection procedures• Organizational support: before, during, and

after assignment• TrainingTraining

– Few U.S. firms train expatriates (30%)– Most European / Asian firms do– Different success rates clearly establish value of

training

Training for Expatriates

• Knowledge-based– Language– Cultural differences

• Cultural sensitivity– General– Specific

• Include spouse and, if possible, family members

Other Support Mechanisms

• Mentor or buddy systems• Trips home• Assistance with schooling and other family

needs• Housing / cost of living differentials• Security

– Safe housing– Guards, kidnapping insurance, etc.